I plan to retire soon and begin receiving my Social Security retirement benefits. I heard that the new big, beautiful bill eliminated taxes on Social Security. What can you tell me?

The new law, known as the One Big Beautiful Bill Act (OBBBA), did not eliminate Social Security taxes. It did, however, provide a temporary “senior bonus” deduction (starting in 2025 through 2028) of up to $6,000 for each eligible taxpayer age 65 or older. The deduction begins to phase out for taxpayers with an adjusted gross income over $75,000 for single taxpayers or $150,000 for joint filers. This new provision is a deduction for seniors and not a refundable credit, thus it will not benefit lower-earning seniors who owe no income taxes.

Who Owes SSA Taxes?

Whether your Social Security benefits are taxed depends on your total income and filing status. Approximately 40% of individuals receiving Social Security have total income levels that trigger federal income tax on their benefits.

To determine if your benefits will be taxable, the first step is to add up your non-Social Security income including wages, taxable and tax-exempt interest, dividends, pensions and taxable retirement plan distributions, self-employment and other taxable income. To that total, add half of your annual Social Security benefits.

If you are single and your combined income from all the listed sources is:

• Less than $25,000, your benefits will not be subject to federal income tax.
• Between $25,000 and $34,000, up to 50% of your benefits will be taxed at your regular income tax rate.
• More than $34,000, up to 85% of your benefits will be taxed.

If you are married and filing jointly and the total from all sources is:

• Less than $32,000, your benefits will not be taxed.
• Between $32,000 and $44,000, up to 50% of your benefits will be taxed.
• More than $44,000, up to 85% of your benefits will be taxed.

If you are married and file a separate return, you will probably pay taxes on your benefits.

To help you with the calculations, review a copy of IRS Publication 915 “Social Security and Equivalent Railroad Retirement Benefits,” which provides detailed instructions and worksheets. You can download it at IRS.gov/pub/irs-pdf/p915.pdf or call the IRS at 800-829-3676 and request a free copy through the mail.

You can also find out if any of your benefits are taxable through the IRS online tax tool which asks a series of questions that will help you determine your status. To access this tool, go to IRS.gov/help/ita and click on “Social Security or railroad retirement tier I benefits - Are mine taxable?” 

To limit potential taxes on your Social Security benefits, you should be cautious when taking distributions from retirement accounts or other sources. In addition to triggering ordinary income tax, a distribution that raises your gross income can bump up the proportion of your Social Security benefits that are subject to taxes.

How to File

If you find that part of your Social Security benefits will be taxable, you will need to file an income tax return using Form 1040 or Form 1040-SR. If you expect to owe taxes, you should make quarterly estimated tax payments to the IRS or have taxes automatically withheld from your benefit payments.

To have the taxes withheld, you must complete IRS Form W-4V, Voluntary Withholding Request (IRS.gov/pub/irs-pdf/fw4v.pdf), and file it with your local Social Security office.

State Taxation

In addition to the federal government, nine states – Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia – tax Social Security benefits to some extent. If you live in one of these states, check with your state tax agency for details.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book.  Any links in this article are offered as a service and there is no endorsement of any product.  These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics.  Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.